The national regulator is going to ban brokers from using bonuses
The European Securities Markets Authority (ESMA) has just issued an explanation of the bonuses used by both Forex brokers and binary options brokers. The European regulator claims that all bonuses that are tied to trading volumes will be banned.
National regulators will also be forced to support the rules and monitor the implementation of the legislation of the European MiFID.
European Securities Market Authority (ESMA)
ESMA
The European Securities Market Authority (ESMA) is an independent financial regulator responsible for regulating financial markets across the European Union (EU).
ESMA ensures that EU laws on financial markets that must be in force throughout its territory, such as MiFID, are indeed supported in all member states.
Eliminating bonuses tied to trading volumes will eliminate a key tool for attracting and retaining customers.
ESMA justifies this decision regarding bonuses by emphasizing the psychological impact that bonuses have on the trader’s behavior. The EU regulator insists that any incentives calling for more trade should be banned. Traders risk more, which eventually leads to them losing everything in their account.
ESMA also stresses that the main result achieved by such bonuses is the exertion of additional pressure.
Eliminating bonuses tied to trading volumes eliminates one of the key factors in attracting and retaining customers. And, as we can already see from the results of the year, binary options brokers are the most vulnerable.
The entire binary options industry is mainly based on providing customers with bonuses subject to the fulfillment of certain obligations if the client wishes to withdraw funds. Often, the client needs to make a turnover of 20-30 times the amount of the bonus itself in order to be able to withdraw it.
WHEN RECEIVING A BONUS FROM A BINARY OPTIONS BROKER, ALWAYS READ THE TERMS AND CONDITIONS. THE BONUS IS ACCRUED WITH THE OBLIGATORY CONDITION OF WORKING OUT (TRADING FOR VOLUME)
According to the pan-European regulator, companies that credit virtual money to the client’s account in the form of a bonus, and set conditions that are almost impossible to fulfill for working out, are not similar to companies acting in the interests of customers.
It is also standard practice to accrue the bonus to a separate bonus account, rather than merging it with the amount in the client’s main account.
